Second Supermercado de Walmart Signals More Vigorous Hispanic Effort

Wal-Mart opened its second Hispanic-oriented Neighborhood Market conversion yesterday in Phoenix and, while the format itself remains a test, what the company is learning from it will be put to work quickly.

The new format, Supermercado de Wal-Mart, is only the latest in a series of recent company initiatives, such as the expansion of money wiring services, that target Latino consumers and demonstrate it is determined to become a dominant retailer in Hispanic communities across the United States.

At an analyst presentation held in conjunction with the company’s annual meeting last week, Eduardo Castro-Wright, Wal-Mart’s vice chairman, said the first Supermercado de Walmart, converted in April from a Houston Neighborhood Market, is an operation that can help Wal-Mart advance its ambition to become a more dominant fresh-food operator, particularly to Latino consumers. In accomplishing that, however, the retailer won’t violates its own tenants by simply expanding product presentations beyond the core assortment that best serves the bulk of its customers. Rather, it will edit presentations to better satisfy the customers shopping a particular location, and what it is learning at Supermercado de Walmart will help in that effort.

Castro-Wright said that approaching Hispanic consumers in fresh food “requires a different level of authority” than has typically been the case for Wal-Mart. He added that Supermercado de Walmart is “a wonderful way of presenting fresh merchandise with authority.”

The Houston Supermercado de Walmart opened with 40 traditional sweet breads and fresh corn tortillas in the product mix, while its meat department featured specialties such as diezmillo, fajitas and arrachera carried to satisfy the specific preferences of local Hispanic customers.

John Fleming, executive vice president and chief merchandising officer for Wal-Mart US, said that the retailer is preparing to upgrade fresh food at its Neighborhood Market and Marketside grocery formats and better mold it to the preferences of a particular store’s customers just as it has done recently for supercenters under its Project Impact program.

We had an opportunity with an existing Neighborhood Market to convert it to the supermercado because it was in a Hispanic neighborhood, and it gave us a chance to really pilot a new program which would better connect with that consumer. But we did some pretty dramatic things there where we increased the presentation of fresh and downsized some of the packaged goods and some of the frozen areas. When it opened, it got just incredible response from customers. What you’ll see over the next few months is that we are taking that same approach with the general Neighborhood Markets where we will apply some of those same principles in terms of adjacencies and space allocation, and navigation, site lines and product presentations to figure out how can we better engage customers in different shopping occasions.

John Simley, a Wal-Mart spokesperson, noted that the proliferation of learning from Supermercado de Walmart would proceeded in accord with a Wal-Mart strategy dubbed Store of the Community that uses company-generated data to tailor product mix to the shoppers of any particular location. He said that insights gleaned from Supermercado de Walmart can be applied to Neighborhood Market and Marketside stores in whole or in part as best serves their shoppers. So, Wal-Mart will make incremental improvements in its fresh-food operation quickly based on what it learns at Supermercado de Walmart and, long before it makes a decision about opening up new stores under that nameplate, presenting Hispanic customers a better product proposition no matter which of its grocery format stores or even supercenters they shop.